Apartments v. Farmers Union Mut. Ins. Co.

• Decision Date: 21 December 2010
• Docket Number: No. DA 10–0226.,DA 10–0226.
• Citation: 358 Mont. 394,247 P.3d 236,2010 MT 270
• Parties: PARK PLACE APARTMENTS, L.L.C., Plaintiff and Appellant,v.FARMERS UNION MUTUAL INSURANCE COMPANY, William F. Wilhelm, and Montana Farmers Union Insurance Agency, Inc. Defendants and Appellees,William F. Wilhelm, Third–Party Plaintiff and Appellee,v.Whitefish Insurance Agency, Inc., a Montana Corporation, Third–Party Defendant and Appellee.
• Court: Montana Supreme Court

358 Mont. 394

247 P.3d 236

2010 MT 270

PARK PLACE APARTMENTS, L.L.C., Plaintiff and Appellant,

v.FARMERS UNION MUTUAL INSURANCE COMPANY, William F. Wilhelm, and Montana Farmers Union Insurance Agency, Inc. Defendants and Appellees,William F. Wilhelm, Third–Party Plaintiff and Appellee,

v.Whitefish Insurance Agency, Inc., a Montana Corporation, Third–Party Defendant and Appellee.

No. DA 10–0226.

Supreme Court of Montana.

Submitted on Briefs Oct. 13, 2010.Decided Dec. 21, 2010.

For Appellant: Terry N. Trieweiler; Trieweiler Law Firm; Whitefish, Montana.

For Appellees: Steven J. Fitzpatrick, William J. Gregoire; Smith, Walsh, Clarke & Gregoire, PLLP; Great Falls, Montana (William F. Wilhelm), James R. Halverson; Halverson & Gilbert, P.C.; Billings, Montana (Montana Farmers Union Insurance Agency, Inc.), Guy W. Rogers, Matthew I. Tourtlotte; Brown Law Firm, P.C.; Billings, Montana (Whitefish Insurance Agency, Inc.), Douglas J. Wold; Wold Law Firm, P.C.; Polson, Montana (Farmers Union Mutual Insurance Company).For Amicus Curiae: Amy Eddy; Bottomly & Eddy, PLLP; Kalispell, Montana (Montana Trial Lawyers Association), Lawrence A. Anderson; Attorney at Law; Great Falls, Montana (Montana Trial Lawyers Association).Justice W. WILLIAM LEAPHART delivered the Opinion of the Court.

[358 Mont. 395] ¶ 1 Plaintiff and Appellant Park Place Apartments, LLC (“PPA”) appeals from the order of Flathead County District Court granting summary judgment in favor of Farmers Union Mutual Insurance Company (FUMIC) and its former agent Bud Wilhelm (Wilhelm), and denying PPA's cross-motion for summary judgment. PPA sued FUMIC, Wilhelm, and Montana Farmers Union Insurance Agency (MFU) when FUMIC denied coverage on a claim made by PPA. This case was consolidated with a third-party claim by Wilhelm against Whitefish Insurance Agency, Inc., but that claim is not a subject of this appeal. We reverse.

¶ 2 We consider the following issue on appeal:

¶ 3 Whether the District Court erred in granting summary judgment in favor of FUMIC and Wilhelm, and in denying PPA's cross-motion for summary judgment.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 In 2001, PPA, through its sole owner, Whitefish attorney William Hileman, began investigating the purchase of a 24–unit apartment complex at 601 Park Avenue in Whitefish. Hileman had the property appraised, and the market value of the complex was estimated to be $750,000. The complex consists of a long, rectangular apartment building, a carport running along the length of the building, and a small laundry and storage building on the opposite side of the carport. The $750,000 estimate included a value of $46,200 for the carport. In connection with the purchase, Hileman contacted Wilhelm, whom he had known for a decade and from whom he had previously purchased insurance. Hileman requested full casualty and liability coverage for the property, which he described as FUMIC's standard “business pack” of insurance products for commercial property owners. The policy limit was set at the appraised value of $750,000. Wilhelm filled out the application for insurance form on Hileman's behalf, and listed the two buildings (the 24–unit apartment building, and the laundry building) on the “Declarations” page. When shown the completed application, Hileman asked Wilhelm what the “second” building (meaning the laundry building) was. Wilhelm informed Hileman that listing the laundry building was not a necessary step, as “all buildings and structures on the property were covered,” but that FUMIC “liked to see those buildings to which people were coming and going specifically identified.” With Hileman's approval, Wilhelm submitted the application, both men believing that coverage had been obtained for the entire property. Hileman signed the application on PPA's behalf on May 1, 2001, the closing date for the purchase of the complex.

¶ 5 The policy was renewable annually, and PPA renewed its policy each year without any further inquiry as to the amount or scope of coverage. In 2005, Wilhelm retired, and his practice was assumed by Monte Sparby. PPA continued to renew through Sparby. Also in 2005, a reference to “BOP–54” was inserted into the policy. BOP–54, an “amendatory endorsement,” was included in a long list of other such endorsements on the renewal declaration. BOP–54 stated that the policy, as modified by the endorsement, covered only those buildings and structures separately listed on the Declarations page for which a limit of coverage was shown.

¶ 6 On February 10, 2008, heavy snow fell throughout the Whitefish area. But while the conditions were wonderful for the ski hill, they dealt a fatal blow to PPA's carport, which collapsed under a massive accumulation of snow and ice, burying numerous vehicles. Hileman submitted a claim under PPA's policy for the damages, and FUMIC claims adjuster Rial Gunlikson responded that the loss was covered. Shortly thereafter, however, Gunlikson contacted Hileman to inform him that the carport was in fact not covered by the policy. Gunlikson stated that the change in policy due to the adoption of BOP–54 had excluded the carport as of 2005.

¶ 7 On April 4, 2008, after speaking with Gunlikson, Hileman wrote to FUMIC and demanded payment on the claim or a written explanation of why coverage was being denied. Four days later, Hileman received a letter in response from Thomas E. Barker, Assistant Vice President of FUMIC's claims department. Barker reiterated Gunlikson's assertions, explaining that the carport was not listed separately on the Declarations page, and due to BOP–54's exclusion of “buildings for which no limit of insurance is shown in the Declarations,” the carport had not been covered since 2005. Having never heard of the endorsement, Hileman contacted Sparby and met with him at Sparby's office, where the file for PPA was kept. BOP–54 was not in the file dedicated to PPA, nor was any notice that the coverage for PPA was being reduced to exclude the carport. The parties dispute whether notice of BOP–54 was ever provided to Hileman or Sparby besides its incorporation by reference on the declaration renewal. Sparby and Wilhelm attest that it was their practice to keep copies of any official communication between FUMIC and insureds, which would have included changes to the policies, and FUMIC employees testify that it was their practice to send out copies of any new endorsements to the insured parties. No parties have specific records or memories of correspondence concerning BOP–54.

¶ 8 On November 13, 2008, PPA filed suit in Cascade County, naming FUMIC and Wilhelm as defendants. FUMIC moved to change venue to Flathead County based on the convenience of witnesses, notably Wilhelm, who was suffering from various health problems. The Cascade County District Court granted FUMIC's motion on February 26, 2009, over PPA's objection, and the Flathead County District Court assumed jurisdiction. After several months of pre-trial activity, FUMIC moved for summary judgment. It argued that the policy listed only the apartment building and laundry building on the Declarations page as insured premises and that the carport was therefore never covered. Wilhelm also moved for summary judgment, arguing that he was no longer working at the agency at the time the current policy was renewed and was thus not a proper party to the suit, and that PPA's request for full coverage was not sufficiently specific to give rise to a duty on his part to insure the carport.

¶ 9 PPA filed a cross-motion for summary judgment. In its brief opposing FUMIC's motion and in support of its own, PPA argued that the plain language of the policy covered all buildings and structures at the address listed on the Declarations page. At best, PPA maintained, the policy contained contradictory definitions of the “insured premises,” creating an ambiguity which must be construed in favor of coverage. PPA also sought summary judgment against Wilhelm, contending that if the carport was not covered, then Wilhelm's negligent failure to procure coverage subjected him and FUMIC to liability. After the briefing of these motions, PPA amended its complaint to add MFU as a party, alleging that MFU was vicariously liable for Wilhelm's negligence.

¶ 10 Argument was heard on all of the above motions on December 10, 2009. Several months later, the District Court entered an order granting the defendants' motions for summary judgment and dismissing all of PPA's claims. The District Court held that the “language of the policy was clear and unambiguous and provided for coverage of the property described in the Declarations,” and because the carport was not listed, it was not covered. The District Court also held that Wilhelm had no duty to provide coverage for the carport absent a specific request that the carport be insured, and that PPA's request for full coverage was “not sufficiently specific to give rise to a duty.” The District Court did not reach the issue of the amendatory endorsement, as it concluded that no coverage had ever existed on the carport. The District Court also did not reach the issue of whether FUMIC or MFU was liable for Wilhelm's negligence as it did not find Wilhelm negligent. PPA timely appealed.

STANDARD OF REVIEW

¶ 11 We review a district court's grant or denial of a motion for summary judgment de novo. State v. Butte–Silver Bow County, 2009 MT 414, ¶ 17, 353 Mont. 497, 220 P.3d 1115. Applying the criteria contained in M.R. Civ. P. 56, we determine whether the moving party has established both the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Goettel v. Estate of Ballard, 2010 MT 140, ¶ 10, 356 Mont. 527, 234 P.3d 99.

¶ 12 The interpretation of an insurance contract is a question of law. Cusenbary v. U.S. Fid. & Guar. Co., 2001 MT 261, ¶ 9, 307 Mont. 238, 37 P.3d 67 (citing Babcock v. Farmers Ins. Exch., 2000 MT 114, ¶ 5, 299 Mont. 407, 999 P.2d 347). When a...